You have just turned 22, and you intend to start saving for your retirement. You plan to retire in 43 years when you turn 65. During your retirement you would like to have an annual income of $120,000 per year for the next 26 years (until age 91).
a) Calculate how much you need have in your account before the first withdrawal at age 66.
b) Calculate how much you would have to save annually between now and age 65 in order to finance your retirement income and to fill that account.
Make the following assumptions:
• Assume that the relevant compounded interest rate is 4 percent for all 69 years.
• You make the first payment today and the last payment on the day you turn 65.
• You make the first withdrawal when you turn 66 and the last withdrawal when you turn 91.
SOLVE USING EXCEL FORMAT